Electricity, gas shortages hit China fertilizer output

Electricity, gas shortages hit China fertilizer output
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The Chinese fertilizer industry is facing shortages of natural gas as well as potential electricity supply restrictions this winter, affecting output.

The natural gas supply shortage has resulted in widespread shutdowns of gas-based ammonia and urea plants since the start of this month.

Argus estimates that gas-based urea output dropped to 12,300 t/d this week, down by 70pc from mid-November. Current urea operating rates are at around 120,000 t/d, a fall of 17pc from mid-November.

The production cut has sent the urea price higher, despite it being the off-season period.

The domestic prilled urea price rose from 1,750-1,760 yuan/t ($267-269/t) ex-works bagged on 3 December to Yn1,780-1,810/t ex-works bagged this week in Shandong. Prices have risen even more sharply in southwest China — to over Yn1,900/t ex-works from Yn1,650/t ex-works — where the gas shortages have led to some of the most severe production cuts.

In contrast to the urea market, the gas supply shortages have had a much more limited impact on phosphate and potash fertilizers, with just a few isolated disruptions reported.

Electricity consumption has been higher than expected so far in December, because of cold winter weather, a strong recovery in Chinese industrial activity and the approaching end of the 13th five-year plan period, which is prompting government bodies to strive to meet their targets.

Electricity restrictions have been reported in Hunan, Jiangxi and Zhejiang provinces this week. Fertilizer producers have not been overly affected so far but there are concerns the power shortages may start to have an impact, especially on ammonia and urea production, if the restrictions continue in the coming weeks.

source: https://www.argusmedia.com/

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